In Ly v Interior Health Authority ( 2017 BCSC 42 ) Justice Morellato found that a 38 year old manager with just over 2.5 months of probationary service was entitled to 3 months reasonable notice because the employer “did not meet its legal obligation to carry out a good faith assessment of Mr. Ly’s suitability for continued employment.”
The first issue facing the Court was the legality of the probationary clause which stated ” Employees are required to serve an initial probationary term of six ( 6 ) months for new hires.”
The Plaintiff argued that this provision was contrary to the BC Employment Standards Act which requires one weeks notice of termination for employees who have 3 months service. Since the common understanding of the term ” probation” is that it allows termination without notice, this provision offended the ESA and was thus invalid.
However this Judge saw it differently.
[50] Absent any express language to the contrary, a probationary term of employment is best understood as part of a contract of employment where: a) the employee is held to the requirement that for a specific period of time that employee must demonstrate certain suitability requirements set by the employer; and b) the employee may be dismissed without reasonable notice (subject to statutory minimums) if he or she does not meet the suitability requirements. If the employee meets the suitability requirements then, after that period of probationary assessment, the employee’s contract continues as a contract of employment wherein the requirements of just cause and reasonable notice apply.
[52] I have concluded that Mr. Ly’s employment comprised an express probationary term of six months duration coupled with the implied term as set out in Jadot: the employer’s contractual right to dismiss a probationary employee without notice and without giving reasons provided the employer acts in good faith in the assessment of a probationary employee’s suitability for the permanent position. However, the common law may be modified by statute and will not imply a term that is contrary to any legislated requirement or entitlement. Accordingly, the statutory entitlement found in ss. 63(1) of the ESA cannot be circumvented or breached by Mr. Ly’s terms of probation. In my view, however, no such breach occurred in the instant case.
[53] The statutory minimum found in ss. 63(1) of the ESA has not been circumvented or breached by Mr. Ly’s terms of probation simply because, as addressed above, there can be no implied contractual right of the employer to circumvent ss. 63(1) during Mr. Ly’s probationary period. The result is that a probationary employee is entitled to the benefits under ss. 63(1) of the ESA during the probationary period. In addition, the existence of the probationary period continues such that suitability also continues to be the standard until the probationary period is completed. In this case then, Mr. Ly was subject to a probationary period, along with the attendant standard of suitability, throughout the course of his short tenure with IHA.
In other words, the Judge interpreted the meaning of probationary employment as incorporating the minimum statutory requirements of the ESA , so that what the term really meant was that :
a) In the first 3 months of your employment we can terminate you without any notice .
b) For the balance of the probationary term in excess of three months we can terminate you upon providing you with the statutory minimums under the ESA.
Now if the clause had said something like ” The first 6 months of your employment are probationary therefore you can be terminated without notice at any time in this period” then of course the clause would be contrary to the ESA and thus be invalid. It is only because the probationary clause in this case did not spell out the specific consequences of termination was the Judge able to read the text as being consistent with the ESA.
In the secound issue the Judge very closely examined whether the Plaintiff had been given a good faith assessment of his suitability for continued employment.
The Judge first stated the legal test for a good faith assessment :
[57] As addressed above, the test for dismissal in the context of probationary employment is suitability. Just cause need not be established. An employer needs only to establish that it acted in good faith in its assessment of the probationary employee’s suitability: Jadot.
[58] In determining whether an employer acted in good faith, courts have examined the process through which the employer determines whether the employee is suitable for permanent employment. While an employer is not required to give reasons for the dismissal of a probationary employee, that employer’s conduct in assessing the employee is reviewed by the court in light of various factors such as:
1) whether the probationary employee was made aware of the basis for the employer’s assessment of suitability before, or at the commencement of, employment;
2) whether the employer acted fairly and with reasonable diligence in assessing suitability;
3) whether the employee was given a reasonable opportunity to demonstrate his suitability for the position; and
4) whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but also character, judgment, compatibility, and reliability:
In applying the test to the facts , the Judge spent an amazing 27 paragraphs detailing the reasons for concluding that the Plaintiff was not given a reasonable opportunity to demonstrate his suitability for the job.
Among the factors that influenced the Judge was the following:
- The Plaintiff had requested in writing, early on, some feedback from his boss on to how he was doing. Management did not respond to this request.
- It was understood from the beginning that there was a steep learning curve to the job and that it would take 6 months to a year to learn the intricacies of the job, however he was fired after only 2.5 months.
- A Ms Erickson, one of the people he was now managing, was well liked by the close knit group of employees . Ms Erickson had acted as the interim manager before the Plaintiff was hired . She had competed for the manager job, but lost to the Plaintiff. It seemed that the employees under the Plaintiff staged a ” palace revolt ” and convinced the bosses that the Plaintiff should go, otherwise they might all quit. After his termination, Ms Erickson was appointed to the Manager position. The coup succeeded.
One lesson to be learnt in this case is that probationary clauses are of little use.
The better practice is to draft straight forward termination clauses that allow an employer to terminate an employment relationship without cause upon payment of a easily ascertainable amount that increases as seniority increases.
If such a clause had been in place in this case, the Court would have no lawful reason to inquire into the “why” of the termination and the parties would have been spared a four day trial.